Payroll tax is a state tax assessed on the wages paid or payable by an employer to its employees. Payroll tax is payable when an employer’s (or group of employers’) total Australian taxable wages exceed WA’s threshold amount of $1 million per year.
The revenue raised by payroll tax is paid into the Consolidated Fund of the State to meet the costs of public services such as education, health, public safety, and law and order.
Each state and territory has its own payroll tax legislation with differing rates and thresholds. In Western Australia, payroll tax is administered and collected under the Pay-roll Tax Act 2002 and the Pay-roll Tax Assessment Act 2002 (PTA Act).
Australian taxable wages are the total taxable wages paid or payable by an employer or group of employers across all Australian jurisdictions in an assessment year. This includes wages that are taxable in WA and the Indian Ocean Territories (IOT), and wages that are liable to tax in another state or territory under that jurisdiction’s corresponding payroll tax legislation.
In 2007 the Commissioners from all of the Australian states and territories committed to harmonisation of payroll tax administration in relation to
- timing of lodgment of returns
- motor vehicle allowances
- accommodation allowances
- taxable value of fringe benefits
- services performed outside a jurisdiction
- treatment of employee share acquisition schemes
- liability of superannuation contributions for non-employee directors and
- grouping of businesses.
See information about payroll tax harmonisation at payrolltax.gov.au